Rusal becomes first Russian firm to list in Hong Kong

published 29 January 2010

Rusal, the Russian aluminium producer controlled by Oleg Deripaska, has floated 11% of its equity in Hong Kong, making it the first Russian firm to go public there. The initial public offering (IPO) raised $2.24bn, implying a total market capitalisation of $21bn. This follows two aborted attempts to list, one in London, one in Hong Kong. The shares fell 10% below the IPO price on their first day of trading on Wednesday. What the commentators said

Lengthy scrutiny meant that Rusal had been on a "long road to Hong Kong", said Tom Mitchell in the FT. Even then, the IPO received regulatory approvals "only after agreeing to unprecedented barriers on retail investor participation" the minimum order allowed was $129,000. Jackson Wong at Tanrich Securities reckoned that was sensible, as the company "is too complicated for an average investor".

That's for sure, said John Foley on Breakingviews. Like the ore it digs out, Rusal is "mixed with too many unwanted elements". Political risk "is outsized", with the Guinean government trying to claw back money. Deripaska is involved in an ownership dispute. And while the flotation alleviates its debt problems, the burden could still overwhelm the company eventually, said the FT.

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Now add this "debacle" of a debut and this has "hardly been a trail of glory" for Rusal, said Jason Bush, also on Breakingviews. It was a weak market but the key problem was the pricing; "it looks like Deripaska and his advisers wanted too much. Still, he won't lose too much sleep. Without an IPO he might have had to relinquish control of the company. Compared to that, a disappointing debut is "trivial".

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